Wednesday, 27 July 2011

Latest on Amazon

Amazon's acquisition of The Book Depository has been submitted to Ireland's Irish Competition Authority, which has just reported back on the proposed acquisition after a three week investigation. They've cleared it, saying that the acquisition "will not lead to a substantial lessening of competition in any markets for goods or services in the state."  Full details on the decision will be released next month.


The decision by the UK's equivalent body, the Office of Fair Trading, should be released by 30th August, at which point the OFT will state whether or not it will refer the takeover to the Competition Commission.  


The Irish decision blows something of a cold wind over at least this bookseller, though of course it's no guarantee of what will or what will not happen.  


I am not hugely convinced by the combined submission by the Publishers' Association and the Independent Publisher's Guild to the OFT, which states that Amazon acquiring the Book Depository will lead to a supermarket-like choice of only bestsellers, as well as decreasing competition.  I'm not certain that this will be the case: the consumer, I believe, will not initially be the one to suffer.  The consumer generally does very nicely thank you out of nice Amazon:  oddles of choice, and the opportunity to make a little money yourself selling off what you've read.   If Amazon doesn't have the choice from its own warehouses, it more than makes up for it with Marketplace.


It's the book sellers who will suffer: the independent bookshops; the chains; and the publishers.  Amazon is not above throwing its corporate weight around (as I've written in earlier blog posts).  With Amazon's increasing acquisitions, and its increasing forays into being a publisher itself, comes the need to make sure its considerable power is exercised to the good.


Clive Keeble, in his reaction to the news piece in Bookseller.com, says:
"The launch of Marketplace in 2001 (April 2002 in UK) was the rocket that launched Amazon into dominance.
Book listings were the gatekeeper to the Amazon website ; however Amazon ensured that they were responsible for minimal stocking liabilities via such as the Advantage programme. At the same time Amazon further squeezed the large publishers for preferrential terms.
Amazon quickly realised that Marketplace was akin to 'slots'(fruit machines) for revenue ; assured percentage commission plus the monthly listing fee from millions of third party sellers.
Nowadays, I believe that Amazon will happily subsidise any losses on their own direct sales of new books from their massive revenue from third party sellers such as TBD. If large publishers are willing and weak then Amazon will happily turn the screw on terms.
I could give numerous instances where Amazon has deliberately predatory priced recently published titles without the assistance of additional discount from publishers. Refuse to supply Amazon and they will source from the wholesale network (if the publishers do not supply the general wholesale network then they would lose sales to many smaller booksellers).
I believe that the objections to the takeover of TBD by Amazon are on very weak grounds : however, I desperately hope that they are reined back. Without the power of strong legislation there will be no control over Amazon ; the various trade bodies should have been petitioning political movers and shakers at least seven or eight years ago."

True.  We must now hope the OFT does not follow Ireland's lead.

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